Even with last week's choppiness, SPX is still inching towards all-time highs.
SPX closed Friday at 1967.57, trading in a fairly tight range of about 9 points for the day. After a volatile week and some steep declines, SPX ended the week down less than 1%. Below is the status of the July weekly Iron Condor opened Friday:
SPX July Weekly Iron Condor
This 6 month SPX chart shows our short strikes:
SPX 6 month Chart:
The position is currently +$20. The target gain is 7% of the margin/risk, or $61. The position will remain open until target gain is reached as long as SPX stays between the short strikes. The position will be exited at target gain, max loss (10% or $87.50), or either short strike. It will be closed regardless before the end of the day on Wednesday. Because this week is the regular monthly cycle, the last day to trade this position is Thursday. I always recommend closing a position before the last day of the trading cycle.
For those of you who follow/trade the monthly SPY Iron Condor, last week was the planned entry week for the August cycle. However, as I posted last Monday, the August option chain does not have the one point strike increments over 200 that is needed for position entry. I contacted CBOE last week, and was informed that "they were waiting to hear back from the SEC". Apparently, they requested approval from the SEC to add the one point strikes over 200 but have not had a response yet. It is a bit of a mystery to me, however, as to the reason they are not being allowed to add the strikes for the August monthly cycle, and I could not get a further explanation from the representative I spoke with.
In looking at the option chain for the cycles before the monthly August cycle (August 2 weekly), and after August (August 4 weekly), I see that strikes are available in 2.5 point increments above 200.
Below is a snapshot of the August 4 weekly option chains, showing the call and put strikes available within the trade guidelines.
SPY August 4 Call Option Chain:
SPY August 4 Put Option Chain:
I thought it may be worth considering trading the Iron Condor on the August 4 cycle this time rather than the regular monthly cycle. However, after looking at the appropriate strikes within the entry guidelines, I don't think this would be a wise entry plan for the following two reasons:
1. Current credit available for the short strikes of 202.50 Call (.13 delta), and 188 Put (-.17 delta) is only $.70, and the trade guidelines call for a minimum credit of $.80.
2. The open interest on the short 188 put strike is only 17, much too low for me to consider a trade entry. Because this cycle is a weekly rather than a monthly cycle open interest will increase over time. However, even with the liquidity of SPY, I always worry about not being able to exit a position with low open interest in a fast-moving market.
I will continue to monitor both the August monthly cycle to see if CBOE is able to add the strikes we need over 200 on the calls, as well as the premium and open interest on the August 4 weekly cycle.
Next week brings some note-worth economic news that could impact the market; including:
8:30 am Retail Sales
8:30 am Empire State Manufacturing Survey
8:30 am Import and Export Prices
8:30 am Producer Price Index
9:15 am Industrial Production
10:00 am Janet Yellen's semi-annual monitory policy testimony to House Financial Services committee.
2:00 pm Fed Beige Book
8:30 am Jobless Claims
8:30 am Housing Starts
10:00 am Philadelphia Fed Survey
9:55 am University of Michigan Consumer Sentiment Report
A trade update on the open weekly position will be posted early next week.
As always, trade carefully and stay keen on your risk management,